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Is Bad Customer Service More Profitable Than Good? (hbr.org)
Two associate professors of marketing recently shared research in the Harvard Business Review about how customer service is structured at at tech, travel, and finance companies:
[O]ur research suggests that some companies may actually find it profitable to create hassles for complaining customers, even if it were operationally costless not to.... We found that these companies screen complaining callers by using a hierarchical organizational structure. This structure, we argue, keeps a lid on the amount of redress customers are willing to seek. In other words, by forcing customers to jump through hoops, the organization helps curb its redress payouts.
As part of our research, described in a forthcoming article in the journal Marketing Science, we interviewed managers of call centers to understand how their customer service organization is structured, and the way it contains redress payouts. We found that most involve at least two levels of agents. The Level 1 agents take all incoming calls and hear each customer's complaint first. These agents are typically limited in the amount of redress they are authorized to offer to the caller...
So what about the idea that frustrating customers has consequences on customer retention and long term reputation? For example, some experts advise companies with upset customers to reach out to them directly to win them back. But, some companies have little regard for their reputation, especially those who control a large market share... companies with few competitors may find it worthwhile to alienate angry customers in order to save on redress costs.... This may help us understand why some of the most hated companies in America are so profitable and why customer service, unfortunately, remains so frustrating.
At one company "Any caller insisting on a refund was told to call the U.S. headquarters during normal business hours, generating additional tasks for any customer seeking more compensation...
"This design relies on the fact that some consumers are not willing to incur this hassle. When this happens, the company is off the hook for the additional payout."
As part of our research, described in a forthcoming article in the journal Marketing Science, we interviewed managers of call centers to understand how their customer service organization is structured, and the way it contains redress payouts. We found that most involve at least two levels of agents. The Level 1 agents take all incoming calls and hear each customer's complaint first. These agents are typically limited in the amount of redress they are authorized to offer to the caller...
So what about the idea that frustrating customers has consequences on customer retention and long term reputation? For example, some experts advise companies with upset customers to reach out to them directly to win them back. But, some companies have little regard for their reputation, especially those who control a large market share... companies with few competitors may find it worthwhile to alienate angry customers in order to save on redress costs.... This may help us understand why some of the most hated companies in America are so profitable and why customer service, unfortunately, remains so frustrating.
At one company "Any caller insisting on a refund was told to call the U.S. headquarters during normal business hours, generating additional tasks for any customer seeking more compensation...
"This design relies on the fact that some consumers are not willing to incur this hassle. When this happens, the company is off the hook for the additional payout."
Just call your credit card company and issue a chargeback. One step, 15 minutes. They'll get the hint, I promise.
They may not get the hint, but at least you won't have to pay for whatever good/service that's messed up. I do it regularly, and the big companies have never bothered to dispute any of the chargebacks. I don't remember ever having to do this with a small company.
I don't respond to AC's.
you'll probably find that just 7 companies made 80% of the stuff you own. We gave up on enforcing antitrust laws and let companies merge whenever they wanted.
You can no longer "vote with your dollars". At this point the only thing holding them back is a (very mild) threat of government regulation. Even that is viewed as just another minor expense buying off politicians.
I've said it before and I'll say it again, we can change this whenever we want. But it involves some trade offs. People have to become more politically active and their politics have to be more focused on economics.
Also, people have to band together and agree that _nobody_ gets screwed over. One of the chief problems we have is that folks want gov't regulations to protect them and their interests but lose interest (or become actively hostile) to anything that might impose the slightest cost on themselves.
This is encapsulated the the phrase "I got mine, fuck you". That shit needs to stop.
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But if your pool of potential customers is big enough and there is few competition, it's possible that not getting repeat customers isn't a business killer.
Also most customers never need customer support anyways.
Call me old fashioned but I remember when we had to support IE 6 and write ancient code and screw 70% of people with modern browsers all to protect 10% of customers. Why? Would you tell 1 in 10 customers to fuck themselves? Of course not!
Same principle I apply when I used to consult or treat coworkers. If they do not like doing business with me then I should be fired. Plain and simple as work is a privilege. Customers are a privilege too not a right or a cost. Don't take care they will leave and go to a competitor who will.
http://saveie6.com/
It is like going to a restaurant and you get terrible service. You get up and walk out. They will be around for awhile. Eventually enough people will do that same thing. Where as the restaurant that gives good consistent service gets repeat customers and stays in business longer.
Not all restaurants rely on repeat business. For instance, restaurants that rely on tourists. In San Francisco, the worst restaurants are at Fisherman's Wharf, and along Grant Street in Chinatown. If you go down the side streets to where the locals eat, you will have a much better experience.
I think that part of what you're describing comes down to people's inherent laziness, and their love of all things convenient. People have to be willing to do some things that are not as convenient as other things (ie: go to a store, and not buy from Amazon). I'm not sure that Americans will ever do this.
I don't respond to AC's.
In my country (Portugal), most people own a smartphone plan with pretty much "unlimited" minutes (from 500 to the thousands). These minutes include calls to most numbers, including other phones and landlines.
You would figure company support numbers would be landlines, right? And indeed they are based on a landline, but practically every single support number in Portugal sits behind paywall so-called Blue (808-prefixed) and Unique (707) numbers in order to keep customers looking for support in check. No only support, to be honest - every single company that previously did business through phones but transitioning to web-based measures, such as banks, mail/package services or even food delivery are pretty much using this tactic.
And of course, there are the smart-ass tech companies, such as Dell or our 3 ISPs. Dell has a great shenanigan, and I believe this one is international - they ask you to input the Express Code of your product for faster service, when in reality this will almost always put you last in line. If you ever had complications calling Dell support, next time try not putting in anything, even after they offer to "explain" where the product is, and you will be picked up almost immediately after. Local ISPs on the other hand have a nice tactic - they don't even offer phone support anymore (THE IRONY!), force you through a ticketing system where your sent messages are NOT kept for review, and they will always reply BY PHONE!!! What a great way to prevent contract liability. I had to set up a reminder every 6 months to ask my (whatever current) ISP when my current contract ends, because ending contracts early here is a thousands of Euro affair and we only ever have negotiating power when not under a contract.
I used to go to a bar that and restuarant that got bought out by Joes Crab shack chain of restaurants. Food sucks and cost accountants now determine the food but hte prices remained high. The good rare European beers are dissapearing because folks from the marketing department said they should serve miller light and coors shit because that is what else the majority of people buy. ... but kept the same high prices where I can buy at the store or another local bar for half price.
Guess what? I only go there a few times a year now instead of once a week.
People traveling may choose McDonalds but what they get is familiarity on the go. That is it. Not because they are afraid of new places or just don't want to deal with a fancy restaurant.
http://saveie6.com/
And it took the professors how many decades to figure th
now we need to go OSS in diesel cars
Companies set up hoops for their customers to jump through knowing many won't put in the effort. Calculated effort. Many examples are possible. I bet companies mail out hardware they know is defective in some way knowing that a certain percentage won't take the time to ship it back. When I was ordering a new laptop a few months ago I had to ship 2 of them back because of bad pixels.
Guess what? I only go there a few times a year now instead of once a week.
Sure, they lose a few potential repeat customers. But most of their customers are not coming back regardless of the quality. So it is better to hire an unskilled chef, understaff the waitstaff, and serve low quality food that can be precooked and warmed in the microwave. The only fixed expense is rent, but you can save on that by skimping on seating and the leave the windows open to catch the breeze off the bay. Customers don't linger when they are freezing, so you can turn around your tables every 30 minutes.
So you cut costs by 30% and lose the 10% of your potential customers who are locals. That is a clear win.
best buy did this with the hard upsells on stuff
but No Customer Service is a subset of Bad Customer Service.
It also is immensely profitable.
Why bother outsourcing your calls to a third world country (or US state where English isn't even a second language) when you can create "customer" interfaces that are designed to make it impossible to actually access?
Sometimes it's better to cut your losses, toss the offending hardware or software and do some reviews before you re-purchase.
Google for anything but heavily overpaid corporate support is a good example of this. Have you ever found a problem with a Google Service and tried to report or have it fixed?
There are other companies that are basically stealing anything you pay them for customer support.
They can't do anything about your problems, except bump them to "valued third party" support companies, who charge you even more.
Profit = (sales) * (profit margin)
so is a function of two variables.
At some point along that scale, profit is maximized The company is happy because it's making lots of profit. The customers are happy because they're getting stuff for cheaper because the company isn't wasting money on excessive customer service.
If you're a naive businessman who thinks you should make sure 100% of your customers are satisfied*, then yes having worse customer service will increase your profits Likewise, if you're a naive businessman who thinks cutting customer service expenses will always increase profit, then no, at some point having worse customer service results in decreased profits. Pretty much everyone who has run a business understands this. These professors would too if they'd spent some time running a business instead of only theorizing about them.
* (The phrase, "the customer is always right," doesn't mean you should give the customer whatever they demand. It means you're better off selling the customer what they want, rather than what you think they should get. In other words, what the customer thinks they want is always right. The phrase has unfortunately been appropriated by abusive customers trying to justify their excessive demands for service from businesses.)
Buying and shopping local is great, in the sense you more directly help your peers keep food on their tables and put their kids through school, etc.
I'm not sure that it helps solve the problem of too many big corporate mergers and too many products made by the same few companies, though?
For example, despite all the prodding and begging for people to patronize our local restaurants, it's being revealed that many of them are really just preparing food that they get trucked in from a big supplier, ready to thaw, heat and serve. So their "specialties" are really just ones created by another big corporation and resold for these places to pretend their own chefs created for you.
I don't think you can avoid buying products made by the "big guys", in most cases. You can sometimes choose to let a small, family owned business make profit off the top of reselling them to you though.
Long-term: no. You will get a very bad reputation and lose a lot of business if or as soon as people have an alternative. But that takes a while. With the focus of the MBA-morons on just the next quarter, they only see the short-term and think they are doing things right.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
It doesn't work so well on something you want people to keep buying and upgrading from you.
--- Mercutio was right.
... is a moron that will not punish companies.
We saw this in videogames 20 years ago with the rise of "MMO's", aka the idea of not owning the game software you are buying was idiotic and people fell for it. PC rpg's in development were rebranded and became "mmo's" with that steam was forced into half-life/cs in 2004 to steal the fucking game.
The internet has been the greatest force for corproate fraud, theft, mass invasion of privacy and destruction of human culture in all of human history and it comes down to the fact the average person is just subhumanly retarded with money. The fact that many games are now "live services" that games like League of legends and Dota 2 can even exist and survive off people buying skins in a game they don't own and they don't even get the skin, it just sets a flag to display it. Same goes for the latest fortnite craze, stupid skins and chests making them billions in a game the morons playing it don't own or control.
So if anything free market theory proves - crime pays because the average human being is just subhumanly retarded and will just bend over infinitely.
the companies that you see having the worst customer service often have little to no competition. The worst offenders here being Cable TV/ISPs. Often there is one or two providers available for a given address, so the Cable provider is of the opinion that the customer has to come to them if they want service. So treating them like crap doesn't lose them anything.
On the flip side, you look at the larger internet sales companies. There are fifty people selling the same product, and normally within fifty cents of everyone else. So if you get a crappy customer sales experience, you will take you next purchase down the road to someone else.
Good customer service is about triage and customer retention. If a customer has called customer service, you have already lost money on the sale because you have to pay a service rep to help this customer out. That help could be anything from hand holding, an exchange, refunds or gift cards. If the customer walks away from the customer service experience saying "This company fixed the problem in a pain free way and didn't complain or make my life difficult. I'd try them again." then you have a chance at another sale. If the customer is thinking "I got my refund but I had to pull teeth and sit on the phone for an hour", then that customer is going to reduce their shopping at that store and tell their friends about it.
In environments where the customer service rep is instructed to stymie or frustrate the caller: The short term goal of keeping the customers money is fulfilled. The long term goal of getting more of the customer's money fails. This adds to the fact that the customer service rep does not bring any perceived value to the customer.
So in a low competition environment, customer service sucks, because it is seen as not needed. In a high competition environment, customer service helps retain customers. Improved customer service takes a long time to see results; it can take months or years to see the results of a loyal customer base that is willing to pay an extra quarter on a product because they trust that customer service is not going to screw them if the product is wrong.
Architectural plans are like computer source code with a couple of differences: You only compile once.
you can go to the far ends of your city and odds are you're buying from those same 7 companies. Short of joining a commune you're stuck.
And it's not like you have a choice. The company you did business with for 20 years gets bought out by a mega conglomerate again, you're stuck.
Whether you buy from Amazon, drive down to Walmart, Target, Costco, whatever. The stuff you buy is made in one of a few factories by a few companies.
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mean that big companies can product massive amounts of goods with relatively few employees. One of the major problems our country is having is all those small businesses. The jobs they create tend to be lower pay then the factory jobs they replaced. At best they make an ok living for the owner. Plus the disperse the work force making Unionization difficult if not impossible. You end up with a bunch of poorly paid workers with no connections and no ability to lobby for better pay.
It's why we're at levels of wealth inequity not seen since the 1930.
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Isn't this similar to the scheme in the book 'Rainmaker' by John Grisham? To flatly deny the service and then create unnecessary loops to delay things intentionally.
Health insurance companies are masters of this. They are great at denying claims. (It is part of our deny-care health care system, but that is too long to discuss here.) Sometimes you get different answers about the same policy, or you are told that something is not covered when it is.
Unfortunately, when health insurance companies engage in the behavior, it can cost hundreds, thousands, or even hundreds of thousands of dollars and cause financial ruin. Even worse, delays can cause additional suffering or even death.
I used to go to a bar that and restuarant that got bought out by Joes Crab shack chain of restaurants. Food sucks and cost accountants now determine the food but hte prices remained high. The good rare European beers are dissapearing because folks from the marketing department said they should serve miller light and coors shit because that is what else the majority of people buy. ... but kept the same high prices where I can buy at the store or another local bar for half price.
Guess what? I only go there a few times a year now instead of once a week.
And when they declare bankruptcy, they'll blame it on millenials.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
They piss you off over and over and over until you give up and hang up. Or they wear you down until you take a package deal you don't want paying too much. Or they fix it with a lower price and you are happy, then it jumps up to twice the original amount you were paying after 3 months. I hate this company.
'nuff said. Fuck them and there no good "promises."
"National Security is the chief cause of national insecurity." - Celine's First Law
Many people simply have no alternative to comcast, they know the service sucks and is overpriced but the alternative is dialup.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
Brings up the old Fidonet statement to my mind "you don't feed Bob Johnstone".
After all this is "news for nerds".
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
With web-based systems for this (maybe even the phone ones too), how many customer RESPONSES could be automated? As in, if I have a complaint with company X, could their customer support maze be completed with simple scripting? Could a company actually be damaged by the reimbursement/warranty claim likelihood suddenly getting to 100%?
Anyone got a good test subject?
-This signature is strictly to prevent comments ending with questions or propositions.-
".....We don't have to." Lily Tomlin, 1976.
Never let a lack of data get in the way of a good rant.
Why go there at all?
I have already figured out that if you want something good - then you usually find that in the small places that are "off the main path", because that's the only way they can stay alive - offer something good. There are shortcomings though - you could get a great piece of food but the selection of beverage may be limited to only a few decent ones.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
I've certainly stopped using two companies because customer service was absolutely appalling. Rather a shame really since one of them used to have pretty good telephone support.
I don't know how many I'm sticking with because I never had cause to complain though.
I've worked closely with legal and HR for years and call center topics appeared regularily.
The real reason has nothing to do with the customers. Those 1st line call center agents are the lowest rank of the corporate ladder, many of them are temp workers, lots of them are badly educated and need absolutely everything spelled out for them. No surprises there, it's not exactly the kind of job someone eager for a career and personal development would choose.
From the company perspective, they simply don't want to give these people who barely care which company they work for too many options to hand out freebies. Many of these people just want to get the call over with, because they are rated by number of calls handled and such KPIs. So if you give them a shortcut such as giving a customer a refund and be done with it, they will routinely take it, even when they shouldn't. That's why they have low limits of what they can hand out, and the more pricey decisions go to a 2nd level where you have more qualified, better trained and more interested about the company (e.g. not temp workers) people.
Assorted stuff I do sometimes: Lemuria.org
If there were a law recognizing excessive hassle -e.g. anything > 1h- to be compensated at professional tariffs, then SP's behavior would change in a heartbeat.
Perfectly reasonably IMHO. Such law is prone to lobbying during conception.
I hadn't the slightest objection to his spending his time planning massacres for the bourgeoisie... (P.G. Wodehouse)
When you get bad customer service, make it unprofitable. Contact them again and again, deluge them with emails, until it costs them more to give you bad service than good. Don't just take it in the face, give it back. Escalate to someone whose hourly wage is significant. Open a case with the BBB. Share your story on social media. Do everything you can to be a total pill. Otherwise, they'll just keep doing it.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Apple
At this point, I'd guess that Comcast has not received more than $10,000 from me, since I kicked them to the curb for their poor customer service.
Is kicking Comcast to the curb worth downgrading to satellite or cellular with its 10 GB/mo cap? Is it worth quitting your job, selling your house, and seeking employment and a house in a different city where an ISP other than Comcast offers affordable home Internet service with a cap more than 100 GB/mo if any?
People traveling may choose McDonalds but what they get is familiarity on the go.
It's also fast and inexpensive.
"First they came for the slanderers and i said nothing."
But if they're a vegan at a steakhouse they won't ever be pleased, you can either try to make water not wet or have one token vegan dish and blow them off.
Steakhouses have buffets for precisely this reason. If a group is all eating together, and a minority are vegan, the minority are less likely to veto a steakhouse if it has a decent salad bar.
This is ridiculous. There's lot's of remaining capacity for people to vote with their wallets. What prevents this from working (much of the time) is the collective action problem: in the moment of truth, the vast majority of the consuming public dials into the narrowest of all "what's in it for me" explanatory frames.
Many people actually prefer to purchase from apex predators, because then you are certainly among the "in" crowd (soon to become an "inn crowded" into a manger of dung and straw, but this takes actual foresight to suss out).
I never purchase anything of personal significance from an apex predator without a premeditated exit strategy.
It takes actual work to rise above tribal heuristics. If everyone else does this work, then you don't have to. Hence evolution has not designed us to reliably do this work.
Looks like Betteridge has finally met his kryptonite.
Best wishes, Sir Ian: it was nice while it lasted.
Does nobody remember how AOL handled things?
http://www.nbcnews.com/id/1030...
The only alternative for Internet access in my town is Frontier, which has even worse customer service track record than Comcast.
After fighting with them for two weeks to get service set up to my new residence, even Comcast's customer service with their four appointment windows during working hours looks good in comparison. Even if they show up late, it's better than them not showing up at all. Twice.
Of course it's profitable to screw over your customers. Higher prices and lower costs is the golden goose.
That's exactly the kind of thing a free market is supposed to curtail. Competition should be able to take customers by offering better services.
But of course, the market is, in many cases at least, working as designed. For every person who loses out on their complaint, there are 100 or 1000 people happy to be paying 0.05% less for the goods and services they purchase by not having to "subsidize" the people who got screwed.
Going to a one-off restaurant that's overpriced and not good would be a worse decision than McDonald's. If I don't have time to research in advance, I probably wouldn't take the gamble either - and I like good food.